It's no secret our economy is stronger than most, or rather not as weak as them.

Despite this apparent vulnerability the Reserve Bank has decided that being nowhere near US80¢ might not be so bad after all. In his testimony to Parliament the other day, after being pressed about what could be done to bring the dollar down, governor Glenn Stevens said "seriously, with strong economies that are attractive to foreign investment it is likely that you are going to have upward pressure on your exchange rate".

It's no secret our economy is stronger than most, or rather not as weak as them. As for being attractive to foreign investment, just ask property buyers from China.

By Stevens' account the dollar was only ever too high because it hadn't dropped with the terms of trade, which is to say the plunge in iron ore and coal prices.

So now that it has, what's the fuss? Besides, who was ever talking the dollar down anyway? Not him. ''I suppose it is assumed," he said, ''that the Reserve Bank might have been trying to move it.'' Gosh, I don't know how we all got that so wrong.

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Even so, the Reserve Bank must have been spooked by the recent jump in underlying inflation, which rose an annualised 3.6 per cent in the December quarter because that's when it stopped, er, supposedly assuming that the dollar was too high.

Rising inflation would destroy any benefit from a lower dollar. We have an economy with a large household debt and high costs of doing business; so a package of high dollar, lower inflation and low interest rates beats a combo of low, higher and high respectively.

But it's hard to see inflation becoming a problem when commodity prices are dropping, thanks to a credit crunch in China where lending rates are rising, inflation has slumped to just 2 per cent and there has been the first default on a corporate bond payment.

The dollar hasn't budged even though the price of iron ore, our biggest export with China - our biggest customer - has dropped about 20 per cent this year.

It's not as if a rebound in its price seems likely either. Miners are digging up more than ever. And China's credit squeeze is partly aimed at steelmakers.

The only plausible reason for the dollar holding up is that the market is speculating on rates rising soon.

But Stevens conceded "a bit of a shift on our part" from "saying there might be scope to go down a bit more".

Instead, they'll stay the same though, "I have not said how long a period, because I do not know".

So the dollar won't budge because rates might rise - but they won't while it stays where it is.